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Who Replaces Venezuela’s Lost Barrels?

The heavy-light imbalance in the global crude market continues to rock tenets that were previously thought immutable. Behind most of the disequilibrium one finds the United States – in the past 5-6 years most of the accretion in global crude production was a result of the US expansion of light sweet shale crude, amidst which the Trump Administration initiated a sanctioning fiesta that saw more than 1mbpd of Iranian medium sour oil scraped off the supplier market and another 1mbpd eliminated from Venezuela’s export portfolio. Ironically, the much-reduced heavy supply hurt primarily USGC refiners, who, with an aggregate heavy crude refining capacity of 2.8mbpd, are best suited to refine Latin American and Middle Eastern heavy barrels. Is there a way out from this for the Gulf Coast?

In the calendar year of 2018, Mexico was the largest supplier of heavy barrels to the United States, exporting some 670 000 barrels per day on an annual average basis (predominantly the 22° API and 3.3 percent Sulphur-containing Maya). Venezuela was second with 0.45mbpd on an annual average basis, spread across a variety of grades that range from the most popular DCO, Zuata, Hamaca to the less frequent Merey and Boscan. Should the United States quit importing Venezuelan crude altogether, for the American national books that would mean a gaping hole of 165 million barrels per year (out of the total 730 million barrels of heavy crude US refiners bought, i.e. almost the quarter)…




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